Boomers’ income hit hardest by downturn

By Matthew Heimer

Between their own job and retirement security, the travails of their post-collegiate kids, and their responsibilities for aging parents, people in their 50s and 60s have arguably faced the longest list of financial worries during the economic turmoil of the last five-plus years. This week, Catherine Rampell of the New York Times offers an overview of recent research that confirms that those worries are based in a harsh reality. Indeed, not only has the recent downturn had a more severe effect on the income of boomers than on any other age group—it also may be taking years off their lives.

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On the income front, Rampell draws on a study by Sentier Research that shows that households headed by people ages 55 to 64 saw the biggest decline in average income—9.7%–between June 2009 (when the recession technically ended) and June 2012. (The national average income drop was 7.2%.) Jobless rates in that age group are low, Rampell notes, but those who do lose their jobs tend to stay unemployed for much longer—and to struggle to match their former income levels when they do find new work.

The financial implications are only the beginning, however. Rampell also cites a study by economists at Wellesley College that looked at the impact of recent recessions on the health of older workers. Their conclusion, as summarized by Rampell: “People who lost their jobs in the few years before becoming eligible for Social Security lost up to three years from their life expectancy, largely because they no longer had access to affordable health care.”

It’s all sobering information, to say the least. MarketWatch’s Andrea Coombes offers a partial antidote today in a column that discusses what investors can do to prepare themselves for the possibility of an earlier-than-desired retirement.

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About Encore

Encore looks at the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities, needs and priorities of people saving for and living in retirement. Our lead blogger is editor Matthew Heimer, and frequent contributors include editor Amy Hoak, writer Catey Hill, and MarketWatch columnists Elizabeth O’Brien, Robert Powell and Andrea Coombes. Encore also features regular commentary from The Wall Street Journal retirement columnists Glenn Ruffenach and Anne Tergesen and the Director of the Center for Retirement Research at Boston College, Alicia H. Munnell.